Reply To: Bailouts


The federal government provided bailout funds to AIG of $182.3 billion starting in September 2008. These funds were used to buy toxic assets from AIG and its counter parties. In the initial bailout of $85 billion, $62 billion went directly to counter parties.

As a condition of the bailout loan, the federal government demanded an 80% equity position in AIG. When AIG paid back the loan (and the warrants were exercised with the higher share price, if they were exercised) the federal government received $22.7 billion.

So the “return” of $22.7 billion on an investment of $182.3 billion is 12.5% over four years. Private entrepreneurs, like Tim Cook, did much better. Society at large would have been better off if the government had left the $182.3 billion in the hands of private capitalists.